Tax dept not to take action on cash deposits made after declaring income under IDS

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The government has said no adverse action will be taken by Financial Intelligence Unit or the income-tax department solely on the basis of the information regarding cash deposit made consequent to the declaration under the black money scheme.

 

Credit for unclaimed tax deducted at source made on declared income shall be allowed and no capital gains tax or TDS (tax deducted at source) shall be levied on transfer of declared benami property from benamidar to the declarant without consideration.

 

To reassure people about the Income Declaration Scheme, 2016, which will close on September 30, the Central Board of Direct Taxes has come out with sixth set of clarifications in form of frequently asked questions.

 

It has again assured those wanting to declare unaccounted assets or income that information in respect of a valid declaration would be confidential and not be shared with any law enforcement agency nor shall be enquired into by the income-tax department itself.

 

The scheme provides an opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income and assets. The scheme came into effect on June 1, 2016 and is open for declarations up to September 30, 2016.

 

A total tax of 45 per cent including surcharge and penalty has to be paid.

 

The amount payable under the scheme can be deposited in instalments. As per the latest clarification, assets declared under the scheme are to be valued at cost of acquisition or at fair market price as on June 1, 2016 as determined by the registered valuer, whichever is higher.

 

However, an option for valuation of registered immovable property on the basis of stamp duty value of acquisition adjusted with the Cost Inflation Index has also been provided.

 

The amount of fictitious liabilities recorded in audited balance sheet and not linked to acquisition of an asset can be disclosed under the scheme as such. The period of holding of declared registered immovable assets shall be taken on the basis of the actual date of registration.

 

The valuation report obtained by the declarant from a registered valuer shall not be questioned by the department. However, the valuer’s accountability will remain, it said.

Source: http://economictimes.indiatimes.com/wealth/tax/tax-dept-not-to-take-action-on-cash-deposits-made-after-declaring-income-under-ids/articleshow/54022802.cms

IDS: CBDT issues circular endorsing validity of e-declarations

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The CBDT has issued an order endorsing the legal validity of the e-declarations made under the ongoing domestic black money window, known as the Income Declaration Scheme (IDS).

With only a month left for the IDS to close on September 30, the Central Board of Direct Taxes (CBDT) said for those entities who make declarations of their domestic untaxed assets in the online mode, the Commissioner rank officer of its Central Processing Centre (CPC) in Bengaluru will be “deemed” as the authority for receiving such declarations under the relevant sections of the I-T Act.

“In continuation to Circular No 19 of 2016, dated 25th May, 2016, the Commissioner of Income-tax, Centralised Processing Centre, headquartered at Bengaluru shall exercise the concurrent powers and functions in respect of the declaration referred to in section 183 of the Finance Act, 2016 which has been furnished electronically under digital signature and shall also be deemed to be the Principal Commissioner or the Commissioner for the purposes of section 186 of the Finance Act, 2016 in respect of such declaration,” the CBDT said.

The CPC based in Bengaluru is the nodal wing of the tax department to receive online filings and Income Tax Returns.

There are two options to file black money declarations under the one-time IDS, one by filling up physical form before a Principal Commissioner of Income Tax in any part of the country and the other by the official e-filing portal of the I-T department.

“The circular has been brought out to endorse the legal validity of IDS declarations made by the e-filing website. It was issued keeping in mind the legal requirement,” a senior official said.

The CBDT, till now, has issued five sets of clarifications or frequently asked questions (FAQs) containing answers to various questions on the implementation of the IDS.

The government, sometime back, had extended the deadline for payment of tax and penalty under IDS and allowed declarants to pay the amount in three instalments by September 30 next year.

The first instalment of 25 per cent under the IDS 2016 will have to be paid by November 2016, followed by another 25 per cent by March 31, 2017.

The remaining amount will have to be paid to the exchequer by September 30, 2017.

Earlier the tax, surcharge and penalty under the black money disclosure window were required to be paid by November 30.

The scheme was announced by the government with an aim to bring out black money from the domestic economy.

The government had come out with a similar scheme for Indians holding undisclosed income abroad.

The scheme will apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to financial year 2015-16 or earlier.

Source: http://www.thehindu.com/business/Economy/ids-cbdt-issues-circular-endorsing-validity-of-edeclarations/article9056076.ece

Tax resolution scheme: CBDT to write to 2.59 lakh taxpayers

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Keen to bring down the number of tax litigations, the Income Tax Department will soon write to over 2.59 lakh taxpayers asking them to avail the one-time dispute resolution scheme to settle their cases.

And to cut down on communication time, the Central Board of Direct Taxes (CBDT) will use email to communicate with the appellants.

“We have estimated that each Commissioner of I-T (appeal) would have about 300-400 litigations pending before them. We will send these assessees emails informing about the benefits of the dispute resolution scheme,” an official told PTI.

The direct tax dispute resolution scheme, introduced from 1 June, seeks to address the issue of pending litigation before commissioner of I-T (appeal). The scheme is open till 31 December.

As per I-T department data, there were 73,402 appeals with tax effect above Rs.10 lakh and 1,85,858 appeals with tax effect below Rs.10 lakh which are pending before commissioner of I-T (appeal) as on 29 February.

Thus, 2,59,260 appellants are eligible for the benefit of this scheme. “The publicity drive will not be as massive as the IDS. Since we know who our target assessees are, we will send them pamphlets and also emails. Also we will paste some pamphlets outside the CIT (appeals) office,” the official added.

Armed with a Rs.100 crore budget for advertisement of income disclosure scheme (IDS) and disputes resolution scheme, the tax department will now launch a publicity drive for entities which are locked in a litigation. Besides, the CBDT will soon come out with over two dozen FAQs based on the queries it has received from various stakeholders, including chartered accountants and industry chambers.

As per the scheme, a taxpayer who has an appeal pending before the CIT (appeals) can settle his/her case by paying the disputed tax and interest up to the date of assessment. No penalty in respect of cases with disputed tax up to Rs.10 lakh will be levied. For cases exceeding Rs.10 lakh, 25% of penalty would be levied and any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty.

“Litigation is a scourge for a tax-friendly regime and creates an environment of distrust in addition to increasing the compliance cost of the taxpayers and administrative cost for the government,” finance minister Arun Jaitley had said in his budget speech.

In a first-of-its-kind nationwide publicity drive, the I-T department had tied up with seven airlines including Air India and Vistara to publicise one-time black money compliance window by printing the scheme’s details on the back of boarding passes.

Source: http://www.livemint.com/Politics/s28nm7vx4fQrNG3ldoqm0L/Tax-resolution-scheme-CBDT-to-write-to-259-lakh-taxpayers.html

I-T returns: Top 1% earned 18% of income

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The top 1 per cent of earning individuals who filed tax returns earned about 18 per cent of the total income in financial year 2011-12, according to the latest data on income tax released by the income-tax department recently.

The bottom half of the earning individuals earned just about 21 per cent of the total income shown in the returns, the data showed, highlighting stark income inequality. However, in between there is a big chunk of middle class. It is this class, which was addressed by Prime Minister Narendra Modi in his Independence-Day speech when he said he would further mitigate their problems with the income-tax department.  The top 1 per cent of the individuals were those who earned Rs 25 lakh and above, while the bottom 50 per cent made up of those who earned up to Rs 2.5 lakh. In between, there was a middle class, constituting about 49 per cent of the total tax payees. Their income was around 61 per cent of the total.

Three individuals filed returns showing income of more than Rs 500 crore in the financial year 2011-12. About 35,616 individuals earned more than Rs 1 crore as taxable income during that year.  These individuals  made it to the super-rich category, for which an additional surcharge of 10 per cent was introduced in the financial year 2013-14. The super-rich surcharge imposed on taxable income of more than Rs 1 crore, has since then been raised to 15 per cent.

India’s Gini Coefficient, a measure of inequality, stands at 0.38. The higher the coefficient, ranging between zero and one, the higher is inequality. However, it should be noted that agriculture income is exempted from income tax.

As many as 1,33,000 individuals reported zero taxable income in 2011-12.  Maximum individuals or about 38 per cent individual return filers (10.8 million individuals) were in the taxable income bracket of Rs 1.5-2.5 lakh.

About 33 per cent of the 46.5 million taxpayers in the country paid taxes but did not file returns in assessment year 2012-13.

For individuals, salary income constituted about half the total income, while business income represented 33.4 per cent. Of the 31.2 million returns filed, 28.9 million or 92 per cent were individual taxpayers.

Amid pressure from celebrated economist Thomas Piketty and Chief Economic Advisor Arvind Subramanian, the revenue department has released the revised set of income tax data for assessment year 2012-13, omitting about 150,000 returns to bring consistency of data within various categories. In cases where more than one returns were submitted, the values of the latest returns have been considered.

Income tax deductions totalling Rs 1.35 lakh crore significantly lowered taxable income of individuals, making up for 11 per cent of total gross income for individuals. For companies, the deductions were about 7.1 per cent of total gross income.

According to a recent write up by Revenue Secretary Hasmukh Adhia and CEA Subramanian, the total tax foregone on all income taxes amounted to 0.4 per cent of gross domestic product in 2011-12. The government had in the Budget announced a plan to phase out corporate tax deductions and exemptions, putting a sunset date in most cases. It plans to reduce corporate tax to 25 per cent from 30 per cent currently by 2019.

With the government taking efforts to encourage individuals to file returns, about 155,000 filed zero-income returns in 2011-12. Filing of returns is mandatory to avail loans.

About 3.7 per cent of the population and 9.1 per cent of the workforce were part of the individual income-tax system the assessment year 2012-13. There were 44 million individual income taxpayers and 0.65 million corporate taxpayers that year. These include those tax payers also who did not file returns but paid tax through tax deducted at source (TDS).

Source: http://www.business-standard.com/article/economy-policy/i-t-returns-top-1-earned-18-of-income-116081601347_1.html

CBDT signs bilateral APAs with Japanese trading firm arm

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The Central Board of Direct Taxes has signed bilateral advance pricing agreements with Indian arm of a Japanese trading company, a move that will help bring down transfer pricing disputes relating to intra-group transactions.

“The Central Board of Direct Taxes (CBDT) entered into a bilateral advance pricing agreement (APA) on August 2, 2016, with Indian subsidiary of a Japanese trading company. This is the first bilateral advance pricing agreement with a Japanese company having a rollback provision in it,” a finance ministry statement said today.
Overall, it is fourth bilateral APA signed by CBDT.

Signing of the pact is an important step towards ascertaining certainty in transfer pricing matters of MNC cases and dispute resolution, the statement noted.

The APA scheme was introduced in the Income-Tax Act in 2012 and the rollback provision in 2014.

The scheme intends to provide certainty to taxpayers in the domain of transfer pricing by specifying methods of pricing and setting the prices of international transactions in advance.

Its progress strengthens the government’s mission of fostering a non-adversarial tax regime, the statement said.

CBDT expects more APAs to be concluded and signed in the near future.

An APA, usually for multiple years, is signed between a taxpayer and the tax authority (CBDT in India) on an appropriate transfer pricing methodology for determining the price and ensuing taxes on intra-group overseas transactions.

Source: http://www.business-standard.com/article/pti-stories/cbdt-signs-bilateral-apas-with-japanese-trading-firm-arm-116080400879_1.html

Extension of Due Date – Filing of Income Tax Return for Assessment Year 2016-17

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Income tax department has issued order that due date of filing of returns of income for the Assessment Year 2016-17 has been extended from July 31, 2016 to August 5, 2016, for those assessees, whose due date was originally 31 July 2016.

 

The relevant circular issued by CBDT in this regard is available at http://incometaxindia.gov.in/Lists/Latest%20News/Attachments/54/order-extension-india-2016.pdf  for ready reference.

 

Please visit http://incometaxindiaefiling.gov.in/ for filing your ITR.

 

Tax return filing is mandatory for Individuals whose income is above the taxable limit.

 

As per CBDT Notification number 225/195/2016 dated 29.07.2016, due date is extended from 31.07.2016 to 05.08.2016 in case of tax payers, not liable for audit, as per the revised due date  August 5, 2016.